Content of the Factoring Contract

Accordingly, Circular 02 stipulates that the factoring contract must be made in writing in accordance with the provisions of the law and other relevant legal regulations, containing at least the following contents:

- Name, address, and business code of the factoring unit; name, address, valid Identification Card number, or citizen identification number or passport or business code of the customer;- Value of the receivables or payables; advance amount; factoring limit for limit-based factoring; content, time of transfer of rights and lawful benefits related to the receivables or payables under the goods purchase and sale contract or service provision contract;- Purpose of using the advance money;- Currency for factoring; currency for repayment, interest payment;- Factoring method;- Factoring term; period to maintain the factoring limit;- Factoring interest rate and method of calculating factoring interest; principles and factors determining the interest rate, time to determine the factoring interest rate in the case of adjustable interest rates; converted interest rate in percentage per year (01 year is 365 days) calculated according to actual factoring debt and the actual duration of maintaining that factoring debt; interest rate applicable to overdue factoring debt; interest rate applicable to late interest payments; related fee types and applicable fees;- Debt repayment, factoring interest payment; order of debt and interest recovery; early repayment;- Transition to overdue debt for factoring debt that the customer fails to repay on time as agreed;- Provisions on recourse of debt and interest, factoring fees; content, time of transfer of rights and benefits related to the receivables or payables during the recourse process;- Cases of termination of factoring; early debt recovery, conversion to overdue debt for factoring debt after termination of factoring;- Debt handling; penalties for violations and compensation for damages;- Responsibility to send notifications to the buyer (if any);- Rights and obligations of the parties, in which the customer commits not to use the receivables, payables to ensure other debt obligations or for other credit purposes without the consent of the factoring unit;- Method of transferring the goods purchase and sale contracts, service provision contracts, goods purchase and sale documents, service provision documents, rights, benefits, and related documents regarding the receivables or payables included in the factoring;- Dispute resolution;- Validity of the factoring contract.

See details at Circular 02/2017/TT-NHNN effective from September 30, 2017.

-Thao Uyen-

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